The Company has embraced the concept of fairness, transparency as well as
promoting Turkey and Turkish Aviation sector internationally by upholding fullyto these Principles of Corporate Governance of Capital Market Board (CMB)

The Investor Relations Department, which reports to the CFO, has beenestablished as an unit that oversees the communication of accurate andtimely information to our investors, maintaining relations and exchanginginformation with capital market supervisors, monitoring capital increases andpublic offering transactions and organizing presentations and informationalmeetings for domestic and international investors. Contact information forthe Investor Relations Manager, Suna ÇELEBİ, is as follows: Contact Details:Phone 212- 463-6363, Extension 3630, Fax 212-465-2307, E-mail ir@thy.com

50.88% of our Company’s share is Free Floating at Istanbul Stock Exchange (ISE). During the year 2009, 258 requests have been submitted to our Companyby e-mail. All of the requests mostly related to financial and operationaldata, were responded to without delay. In addition to those requests, a largenumber of investors and shareholders were provided with information by telephone. The Company does not discriminate among shareholders on theissue of exercise of shareholders’ right to obtain and evaluate information. TheCompany has created a web site in order to allow shareholders to exercisetheir right to obtain information effectively.

Pursuant to Article 6 of our Articles of Association, all share certificates of ourCompany are registered and are categorized into two groups: A and C. Thereis only one outstanding Group C share, which belongs to the PrivatizationAdministration of the Prime Ministry (OIB) incase such duties of OIB aretransferred then the transferee institution. Presently, 49.12% of Group Ashares belong to OIB, and 50.88% are traded publicly.
In the course of 2009:
1. An Extraordinary General Assembly was held on January 22, 2009 that servedto bring our Company’s Shareholders’ Agreement into conformity with the NewTL, as required by the decision of the Capital Markets Board. Shareholders representing 92,900,317.66 TL of the 175 million TL of our Company’s issuedshare capital attended the Extraordinary General Assembly.
2. An Ordinary General Assembly was held on May 4, 2009 to review 2008accounts and operations. Shareholders representing 90,414,562.66 TL ofthe 175 million TL of our Company’s issued share capital attended theOrdinary General Assembly.
Invitations to both the Ordinary and Extraordinary General Assembly werepromulgated by way of announcements in the agenda of the Trade Registry Gazette and in one newspaper circulated across the country, as well as through announcements on the Investor Relations page of our website.
Pursuant to Article 29 of our Articles of Association, we are under no obligationto send notification of the meeting date by registered mail to shareholdersholding share certificates traded on the stock exchange.
No time period has been stipulated for holders of registered shares to place
notification with the share register in order to secure participation in the
general assembly. Other conditions relating to this matter are set forth in
Article 7 of our Articles of Association, as follows:
Transfer of shares is subject to the provisions of Turkish Commercial Code,Capital Market regulations and Civil Aviation regulations.
Transfer of registered shares will be effective with regard to the Incorporationupon registration in the Share Register. The shareholders will be under theobligation to evidence when required, according to the format as determinedby the Board of Directors, their identities and nationalities and, if available, the“Foreign shareholding” relation as indicated in Article 6, before registration ofthe registered shares in the Share Register.
Until registration of the share transfer in the Share Register, the holderregistered in the Share Register will be deemed as the holder of the sharesby the Incorporation.
Share transfers will be registered in the Share Register upon resolution of theBoard of Directors. The Board of Directors may refrain from registering anyshare transfers in the Share Register in cases which are not in consistency withthis Articles of Association or the law or without indicating any reason therefore.
Share transfers which are not in compliance with the foreign shareholdingrate limits as indicated in Article 6 above, may not be registered in the ShareRegister. The Board of Directors will be under the obligation to reject the registration of such share transfers in the Share Register. Share transferswhich are not registered in the Share Register by the Board of Directorswill not be recognized by the Incorporation and the related transferee willnot be granted to be a shareholder. The affirmative vote of the member,appointed to the Board of Directors to represent Group C share is required inthe resolutions of the Board of Directors to affirm the share transfer and toregister this in the Share Register.
Group C share may be transferred to any Turkish public institution substantiallyhaving the same powers granted to the Prime Ministry Privatization Directorate byLaw No: 4046. In case of such a transfer then this will promptly be registered in theShare Register without requirement for any resolution of the Board of Directors.The Board of Directors will be under the obligation to limit the transfer of theshares to the foreigners, in order to comply with the provisions of Civil Aviationand/or other laws, it is subject to, and with the limitations as indicated in
thisArticles of Association and to avoid from endangering the traffic and cabotagerights held by the Incorporation.
As per article 362 of the Turkish Commercial Code (TCC), the incomestatement, balance sheet, annual report and proposals for the method ofdistribution of net income will be made available to shareholders at the Head Office of the Company at least 15 days prior to the Ordinary General Assembly,accompanied by the report to be issued by auditors.In General Assembly Meetings, existing practice endeavors to respond toshareholder questions orally and to address more comprehensive questionsin writing; however, since no questions requiring a written answer wereencountered during these period, verbal explanations were deemed adequate.
The powers of authority of the General Assembly are set out in Article 27 of ourArticles of Association; as such, the General Assembly is that body holding thepowers of authority as stipulated in TCC and other laws. Outside of this article,there is no provision in the Articles of Association calling for resolutions by General Assembly on matters of material importance.
Under Article 14 of our Articles of Association, the validity of any resolution tobe adopted by the Board of Directors on the matters listed below is contingentupon the participation of the Board member representing the Group C share inany meeting where such resolutions are to be adopted and upon that member casting an affirmative vote.
- Resolutions which will clearly adversely affect the mission of the
Incorporations as indicated in Article 3.1 of this Articles of Association;
- Any suggestion to be made to the Shareholders Assembly for any modificationin the Articles of Association;
- Increase of the share capital;
- Approval of transfer of registered shares and registration of the transfer in
the Share Register;
- Any transaction, based on each contract, which exceeds 5 % of the totalassets of the Incorporation as indicated in the latest balance sheet submittedto the Capital Market Board and which is directly or indirectly binding forthe Incorporation, any resolution which will bring the Incorporation under anycommitment, (provided that in case the share of the public in the Incorporationhas decreased below 20% of the Incorporation’s share capital, then theprovisions of this clause will automatically terminate);
- Merger, termination or liquidation of the Incorporation;
- Any resolution about the cancellation of any flight route or for a remarkabledecrease in the number of flights, excluding the routes which do not even haverevenue to meet its own operating costs based on exclusive market conditionsor through other sources.
- The privileges of Group C share may only be limited by the High Commissionof Privatization or any other public institution which has taken over such duties.
Minutes of General Assembly Meetings are made available to shareholderswithin our Company all the time and are delivered to shareholders upon request. Furthermore,
General Assembly minutes and attendance list are made available on the Investors’ Relations section of our website.

1. Voting Rights are set out in Article 31 of our Articles of Association, asappearing below.“Each shareholder or proxy attending the ordinary or extraordinary Shareholders Assembly Meetings will be vested with onevote for each share, provided that the provisions of Article 6/d of thisArticles of Association are reserved.
2. Under Clause 5 of Article 14 of our Articles of Association, It is required forthe Board member representing Group C share to attend the meeting andhis affirmative vote is required for the effectiveness of the resolutions of the Board of Directors regarding the followings issues:
- Resolutions which will clearly adversely affect the mission of theIncorporations as indicated in Article 3.1 of this Articles of Association;
- Any suggestion to be made to the Shareholders Assembly for anymodification in the Articles of Association;
- Increase of the share capital;
- Approval of transfer of registered shares and registration of the transferin the Share Register;
- Any transaction, based on each contract, which exceeds 5% of the totalassets of the Incorporation as indicated in the latest balance sheet submitted to the Capital Market Board and which is directly or indirectly bindingfor the Incorporation, any resolution which will bring the Incorporationunder any commitment, (provided that in case the share of the public inthe Incorporation has decreased below 20% of the Incorporation’s sharecapital, then the provisions of this clause will automatically terminate);
- Merger, termination or liquidation of the Incorporation;
- Any resolution about the cancellation of any flight route or for aremarkable decrease in the number of flights, excluding the routeswhich do not even have revenue to meet its own operating costs based onexclusive market conditions or through other sources. The privileges ofGroup C share may only be limited by the High Commission of Privatizationor any other public institution which has taken over such duties.
3. Under Article 10 of our Articles of Association, The Board of Directorswill consist of 7 members appointed by the Shareholders Assembly. It isobligatory to appoint 6 members of the Board of Directors, by electingamongst the candidates nominated by the Group A shareholders havinghighest votes, and to appoint one member by electing amongst thecandidates nominated by the Group C shareholder.Below principles will apply in the nomination of the candidates by the GroupA shareholders:
a) In case the rate of being open to public is 15% (including), then theshareholders holding the Group A shares open to public will have the rightto nominate one of the 6 members granted to Group A shares.
b) In case the rate of being open to public is 35% (35% and more), then theshareholders holding the Group A shares open to public will have the right to nominate two of the 6 members granted to Group A shares.
c) In order to be able nominate candidates for the Board of Directors by theshareholders holding Group A shares open for public, they are required to berepresented at the rate of minimum 2% of the total issued share capital of the Incorporation during the Shareholders Assembly in which the members of the Board of Directors will be elected. Calculation of the aforementionedrate of 2% will be based only on the Group A shares open for public. Shareholders holding Group A shares open for public will determine thecandidates nominated for the Board of Directors in a special meeting. In thismeeting only shareholders holding Group A shares open for public, not heldby the public, will be entitled to nominate candidates. In case shareholdersholding Group A shares open for public are not represented in the rate of2% at the Shareholders Assembly, then the right of such shareholders to
nominate candidates for the Board of Directors, will be used by the othershareholders holding Group A shares not open for public according to therules of Turkish Commercial Code and Capital Market.
d) In the event of any vacancy in any membership of the Board of Directors dueto any reason like death, resignation, dismissal or cease of membership, thensuch vacant position will be occupied by the election of the Board of Directors made in compliance with Article 315 of Turkish Commercial Code. In the event of any vacancy in the Board of Directors due to any of the aforementioned reason, then the shareholders holding the group shares entitled to nominatethe candidate office of which is then vacant, will be entitled to nominate acandidate for the vacant position and the Board of Directors will elect thiscandidate for this vacant position. In the event that the shareholders holdingGroup A shares open for public may not nominate any candidate for the vacantposition in the Board of Directors then Group C shareholder will be entitled tonominate a candidate for the vacant position or in case Group C share has beenconverted to Group A share, then the shareholders holding Group A sharesnot open for public will be entitled to nominate a candidate for the vacantposition. In the election for the vacant position of the candidate nominated bythe shareholders holding Group A shares open for public, the rates of 15%,35% and 2% as indicated in paragraphs (a), (b) and (c) above will not be taken
into consideration. The appointment of the successor member of the Board will be submitted to the approval of the following Shareholders Assembly. TheBoard member approved by the Shareholders Assembly will continue the Officeperiod of the predecessor member.
e) In the event information is given that any Board member representinga legal person has no more relation with that legal person or in the eventsuch legal person transfers its shares to a third party, then this memberwill be deemed to have resigned, and provisions of paragraph (d) hereofwill apply in nominating a candidate for the vacant position.
f) In the event of any modification in this Articles of Association and creationof new share groups, the right granted to the shareholders holding GroupA shares open for public to nominate 2 Board members as indicated inparagraphs (a) and (b) above may not be cancelled or modified, unless theaforementioned modification is approved by the shareholders representing65 % of the issued share capital.
4. No mutually-affiliated relationship exists with any other company.
5. Representation of minority shares in management is carried out inaccordance with Article 10 of our Articles of Association, as specified above.
6. Our Articles of Association do not contain provisions for accumulated voting.

The determination and distribution of profits from our Company are set forthin Article 36 of our Articles of Association, as follows.The net profit, as indicated in the annual balance sheet, found after deductingfrom the revenue of the Incorporation, the amounts required to be paid orreserved by the Incorporation like general expenses and various depreciationsand the taxes required to be paid by the Incorporation, following the deductionof the losses of the past years, will be distributed in the following priority:
a) Legal reserve fund in the rate of 5% will be reserved. Our Dividend Policy ispublished at our web site.
b) First dividend in the rate and amount as determined by Capital MarketBoard will be deducted from the balance.
c) After deducting from the net profit the amounts indicated in clauses (a)and (b) above, the Shareholders Assembly will be entitled to resolve either todistribute as second dividend or to reserve as extraordinary reserve fund, theentire or any portion of the balance.
d) Second reserve fund will be reserved according to Article 466, paragraph 2,clause 3 of Turkish Commercial Code in the rate of one tenth of the amount found after deducting the profit share in the rate of 5% of the issued share capital from the amount resolved to be distributed to the shareholders andthose entitled to participate the profit.
e) Unless legal reserves required by law and the first dividend determined in theArticles of Association for the shareholders are reserved, no resolution may beadopted to reserve other reserve funds, to transfer profit to the coming year, andunless first dividend is paid in cash and/or in share certificates, no resolution may be adopted to distribute profit to the privileged shareholders in profit distribution,to the holders of participation, founder and ordinary interest certificates, tothe members of the Board and officers, employees and workers, to the trustsestablished for various purposes and similar persons and/or institutions.The General Assembly shall determine the time and method of payment of dividends in accordance with the directives of Capital Market Board. In thisregard, our Company’s dividend distribution policy as formulated by the Boardof Directors by taking the strategic targets, growth trend, financial needs andthe expectations of the shareholders of the Incorporation into consideration andunder the provisions of the Turkish Commercial Code, Capital Markets Law,other related legislation and its Articles of Association, and the Incorporationwill basically distribute profit at the minimum ratio determined by the CapitalMarkets Board by means of cash and/or bonus shares and upon taking ofthe potential of the Incorporation to be able to distribute profit, it is alwayspossible for the Board of Directors to resolve for distributing profit above the minimum ratio and submit it to the approval of the General Assembly and theprofit share distribution shall be carried out within their legal terms.

Article 6 of our Articles of Association;
Shareholders Nature
The shares held by the foreigner shareholders may not exceed 40% of theissued share capital of the Incorporation. In calculating the rates of the sharesheld by the foreigner shareholders, the rate of foreign shareholding in the shares held by the shareholder holding Group A shares which are not open forpublic will be taken into consideration as well.
Foreign shareholder shall mean:
- Foreign natural or legal persons;
- Turkish companies, share capital of over 49% of which are owned byforeigners;
- Turkish companies in which majority members of administrative and representative boards are not Turkish citizens and in which majority votes arenot on Turkish partners according to their articles of associations;
- Turkish companies under actual control of the aforementioned.
In order to ensure that the aforementioned share rate limitations on the foreignerpartners will be complied with the provisions of the Articles of Association, theIncorporation will use separate parts for foreign shareholders in registering theshareholders and their related share rates in the Share Register.
It is obligatory to promptly notify the Incorporation of any share purchaseand sale reaching to 1% of the issued share capital of the Incorporation. Moreover, the shareholders who have reached or exceeded the maximum foreign shareholding rates as indicated in this Articles of Association, areobliged to promptly notify the Incorporation as they become aware of this. Thepurpose of such notification is to follow the foreigner element and remarkableshare movements and to ensure the Board of Directors to perform its powersbased on these, and only notification will not result with the nature of being ashareholder unless registered in the Share Register, and only the records inthe Share Register will be relied on in such cases.
In cases where it is understood through the notifications or through othermeans that the total shares held by the foreigner shareholders have exceed40% of the issued share capital of the Incorporation, then the Board of Directorswill be under the obligation, to promptly notify the related shareholders latelywithin 7 (seven) days, starting from the latest share transfer, to dispose of theshares which exceed the foreign shareholding limit, in amounts and rates to bein conformity to the foreign shareholding limit and otherwise the Incorporationwill be entitled to apply any of the measures indicated below. The foreignshareholder to whom the notice to dispose of its exceeding shares has beenserved, will be under the obligation to sell such shares which have caused theforeign shareholding limit to be exceeded, to a person who is not included inthe foreign shareholder definition in this Articles of Association, within theperiod stated in the notice. In case such shares are not disposed despite thenotification, then the Board of Directors will be under the obligation to meet in3 (three) days and to take a resolution to cover the measures indicated belowin regard to the shares exceeding the limit.
(i) To redeem with the nominal value, the shares held by the foreignshareholder which has caused the foreign shareholding limit to be exceed,through decreasing the share capital; with this purpose, the Incorporationwill first notify the shareholder who has exceed the foreign shareholding limitthat his shares will be redeemed. In case
such a notice may not be servedthen the fact will be announced in two newspapers published at the placewhere the head office of the Incorporation is located. Expenses related withsuch redemption, will be collected from the shareholder who has caused theredemption, through deduction from the redemption amount.
(ii) In cases where the total share rate of the foreign shareholder is over thelimit indicated in this Articles of Association, then the Board of Directors willbe entitled to increase the share capital in order to reduce the rate of theshares exceeding the limit. In this case, new shares may be issued by limitingthe preferential purchase options of the existing shareholders according to therules of the Capital Market Board.
REASONING FOR THE ARTICLE:
The reasoning for the rule in this Article is provided in the final paragraph of Article 7 of our Articles of Association and in paragraph below. The regulations to which our company is subject in its capacity as an airline and to which itmust adhere are also explained.
a) An airline company that does not qualify as Turkish on account of provisionslisted in Articles 31 and 49 of Turkish Civil Aviation Act No. 2920 may not obtain an operating license or, if it does possess an operating license, such operating license shall be revoked in the event it ceases to qualify as Turkish due suchfactors or events such as the transfer or sale of shares of the airline or dueto the majority of the members of its Board of Directors being foreign, etc.
b) In order for flights to be possible from one state to another, that is, tosecure rights to international traffic, bilateral inter-governmental aviation treaties must first be executed between the two given countries, and themajority ownership of the airline to be designated by the Turkish Governmentand the control of such company must lie in the hands of Turks (natural orlegal persons). The criteria of nationality that qualifies our company as Turkishis a also a sine qua non condition for holding the right to traffic under thebilateral aviation treaties executed between states.Hence, since the right of traffic may only be granted to an airline domiciledin Turkey if the majority of its shares of effective control thereof belong toTurkish citizens or companies, and since in the event such airline ceases toqualify as Turkish (or it fails to prove that it has not ceased to do so or if othercontracting states to which flights will be made fail to believe that it has notdone so) then the relevant airline shall lose its right to traffic, the criterion ofnationality is an element of vital importance for an airline.Hence, Article 6 of our Articles of Association contain provisions governing the
foreign element in order to ensure that our airline’s operating license and alsoour international traffic rights are secured, as explained above. Accordingly, restrictive rules were set out in terms of the limitations imposed on the foreignshareholding ratio for the protection of the traffic rights of our Company basedon the criterion of nationality, should such limit be exceeded.
2- Articles of Association Article 7 (Transfer of Shares)Transfer of shares is subject to the provisions of Turkish Commercial Code,Capital Market regulations and Civil Aviation regulations.Transfer of registered shares will be effective with regard to the Incorporationupon registration in the Share Register. The shareholders will be under theobligation to evidence when required, according to the format as determinedby the Board of Directors, their identities and nationalities and, if available, the“Foreign
shareholding” relation as indicated in Article 6, before registration ofthe registered shares in the Share Register.
Until registration of the share transfer in the Share Register, the holderregistered in the Share Register will be deemed as the holder of the sharesby the Incorporation.
Share transfers will be registered in the Share Register upon resolution of theBoard of Directors. The Board of Directors may refrain from registering anyshare transfers in the share Register in cases which are not in consistency withthis Articles of Association or the law or without indicating any reason therefore.
Share transfers which are not in compliance with the foreign shareholding ratelimits as indicated in Article 6 above, may not be registered in the Share Register.The Board of Directors will be under the obligation to reject the registration of such share transfers in the Share Register. Share transfers which are not registeredin the Share Register by the Board of Directors will not be recognized by theIncorporation and the related transferee will not be granted to be a shareholder.The affirmative vote of the member, appointed to the Board of Directors torepresent Group C share is required in the resolutions of the Board of Directors toaffirm the share transfer and to register this in the Share Register.
Group C share may be transferred to any Turkish public institution substantiallyhaving the same powers granted to the Prime Ministry Privatization Directorate byLaw No: 4046. In case of such a transfer then this will promptly be registered in theShare Register without requirement for any resolution of the Board of Directors. The Board of Directors will be under the obligation to limit the transfer of theshares to the foreigners, in order to comply with the provisions of Civil Aviationand/or other laws, it is subject to, and with the limitations as indicated in thisArticles of Association and to avoid from endangering the traffic and cabotagerights held by the Incorporation.

Our Board of Directors has established Disclosure Policy to share information on the performance and forward looking developments within the scope ofgenerally accepted accounting principles and Capital Market Legislation (CML), Capital Markets Board and Istanbul Stock Exchange regulations and Capital Markets Board Corporate Governance Guidelines in a fair, complete, accurateand comprehensible way with the capital market participants equally and keepan active and open dialogue always available.
Turkish Airlines’ policy to give correct, complete, understandable, analyzableand cost effective easily accessible information, except trade secrets, to thecapital market participants and personnel about its activities and relatedstrategies, critical subjects, risks and developments. The comprehensivepublic disclosure policy of our Company as approved by the Board of Directorsmay be found on our Company’s website.

In addition to the financial statements and notes to financial statements for 2009,our Company made 64 Material Disclosure in accordance with CMB’s Directive Series: VIII, No: 54 on Public Announcements of Special Circumstances, and nosupplementary announcements were required by the CMB and ISE regardingsuch
announcements. Our company has used its best efforts to ensure that itsmaterial disclosures were communicated to investors, deposit holders, agenciesand organizations simultaneously, in due time and in an understandable,accurate and interpretable form. Since no Material Disclosure was made byour Company that was not delivered in a timely manner, no sanctions wereimposed by the CMB or ISE during the applicable period. Furthermore, since ourCompany shares are not listed on any International Stock Exchange, no MaterialDisclosures were made to any International Stock Exchange.

Our Company’s web address is www.thy.com.tr, and the Investors’ Relationspage may be accessed via this website. The website also has an English version.The Investor Relations page contains information on shareholding composition,Minutes of General Assemblies, proxy specimens, annual reports, financialstatements, commercial operating data, presentations, Corporate GovernanceGuidelines, details on the Board of Directors, Material Disclosures, shareinformation, analyst information, Articles of Association, Board Committeesand contact information. Furthermore, a section with live data as well ashistorical data on Share performance of the Company procured from a datadistribution company is available on the relevant page.

No natural person exists with final controlling shareholding in our Company.

Board of Directors, Auditors, CEO, Executive Vice Presidents, ExecutiveAssistant, Investor Relations Manager, Press Consultant, Director ofAccounting, Director of Finance, Director of Investment Management, Director of Corporate Communications, as well as all staff of these Directors areprohibited from revealing any knowledge acquired during their terms of dutyand fields of operation That could be used to the advantage of third parties oradvantage of themselves.

In our announcements to the public of information regarding our Company, inaddition to forecast and material disclosure announcements other informationand statements that are deemed to be of interest to other beneficiaries aredelivered to the public in a timely and clear manner through the appropriatecommunications channels.
Not only stakeholders and investors, but also suppliers, financial institutions andother interested parties may obtain information about our company via our website.Personnel receive information regarding the Company’s general practices andoperations through internal annoucements through the Company intranet site.

Our Company adheres to a Human Resource Code established by our Boardof Directors, and the Company act in accordance with Labor Law No. 4857regarding the personnel policies. In addition, our Company’s personnel areunionized and as such work under a collective bargaining system. Employee/employer relations are conducted in an effective and result-orientedmanner at all levels and on any subject concerning collective bargainingand representatives appointed by the union in
numbers and percentages asspecified in Article 34 of Unions Law No. 2821 and by union directors. Trainingservices are provided to all our personnel. No complaints of discriminationhave been received from any employee.

Since the Company is an IATA member, ticket sales are subject to certainrules and regulations determined by IATA. In addition, forms for complaintsand suggestions are made available to customers on board and at all airportsand these are evaluated in an effort to improve customer satisfaction. Otherefforts geared toward customer satisfaction include the practice of allowing acommitment and penalty-free 24-hour option for changes or cancellations onreservations made over phone, assistance provided to passengers with specialneeds or with disabilities, meeting basic passenger needs at times when flightsare grounded during delays, taking the necessary measures to facilitate checkin.Customer satisfaction principles adopted by the Company in direct passengerrelations form the basis of the agreements signed with agencies. Only agenciesthat comply with these principles are allowed to work with Turkish Airlines.Agencies that do not comply with the rules are issued the necessary warnings andthe business relationship is terminated in the event of repeated violations. TheCompany engages in the purchase of goods and services in accordance with thePurchasing/Sale Regulations that have been drawn up with the resolution of theCompany’s Board of Directors and revised regularly since 1952 . Announcementsfor tenders are made in newspapers that have highest circulation nationwidewithin the timeframes set forth by Company, and also announced on the websitewww.thy.com. Procedures have been documented via Customer RelationshipManagement (CRM) for areas relating to customer loyalty analysis, globalcustomer research, corporate prestige research and the hidden customerprogram, and implementation of the “hidden customer” program aimed at qualityimprovement has begun. Our company became a Star Alliance member to improveboth customer satisfaction and our global mage. Cooperation still continues withmember airlines of the Alliance to improve international products and services andto participate an global information sharing and auditing mechanisms.
Customer grievances may arise due to faults that occur from time to time inour Company’s operations and services. We strive to address such grievancesand restore satisfaction in the shortest possible time, and are looking to createa faithful customer profile. Our Customer Relations Department is engagedin efforts towards these ends. In order to complete work quickly and enablevarious departments to communicate findings from their own studies to theCustomer Relations Directorate in as soon as possible, the company as wholehas adopted a Department Performance assessment system, whose statisticsare monitored by General Management.

The Company continued to operate by its service quality and social responsibilityphilosophy, keeping its leading position both in the country and abroad. Nolawsuits have been filed against the Company in Turkey on the ground of causing environmental damage.

Members The Board of Directors is comprised of seven members elected by the GeneralAssembly. Six Board Members are required to be elected from among thecandidates receiving the highest number of votes in the election held by ClassA shareholders. The other member is nominated by the Class C shareholder.At least five Board Members, including the Board Member representing theClass C share, must be Turkish citizens. The term of office for Board membersis two years. The General Assembly may terminate the membership of a BoardMember before the end of his/her term. Board Members whose term hasexpired may be reelected.
Members of the Board in 2009:
Candan KARLITEKİN - Chairman of the Board
Hamdi TOPÇU - Deputy Chairman of the Board
Ph.D. Temel KOTİL - Member of the Board and General Manager
Prof. Dr. Cemal ŞANLI - Member of the Board
Orhan BİRDAL - Member of the Board
Muzaffer AKPINAR - Member of the Board
Mehmet BÜYÜKEKŞİ - Member of the Board

The criteria for Board membership are specified in Article 11 of the Company’sArticles of Association. In addition, Article 4/i of Law No. 4046 stipulates that inorganizations to be privatized, Board Members shall be graduates of fouryearhigher education programs. Care is taken to comply with the provisionsof Articles 3.1.1, 3.1.2 and 3.1.5 of Section IV of the Corporate GovernancePrinciples concerning the appointment of Board Members. Qualifications of the Company’s Board Members are in accord with these articles. Article 11and Provisional Article 1/c of the Articles of Association are quoted below.
ARTICLE 11
Persons to be elected to the Board shall not have been placed under legalrestraint; a Company where they owned an interest or worked as a manager shallnot have been declared bankrupt or insolvent; they shall be a shareholder of the Company and shall not have been convicted of an infamous crime or any othercrime specified in the Civil Aviation Law. If a member who is not a shareholder iselected, that individual may only assume duties after having become a shareholder.
The General Assembly may grant permission for the cases defined in Articles
334 and 335 of the Turkish Commercial Code.
Board Members representing Class C shares and at least five members(including those who represent Class C shares) must be Turkish citizens.
Provisional Article 1/c
With the exception of the provisions outlined in the Paragraph “d” belowconcerning elections to be held among candidates nominated by Class Ashareholders in accordance with Law No. 4046, the Chairman of the Boardof Directors, Board Members, Auditors and the General Manager shall beappointed upon the proposal of the Privatization Administration or the approvalof the authorized Minister. This is
carried out on the condition that they cansatisfy the conditions set forth in the Law, and that the state’s stake in theCompany does not fall to below 50%.

The Board of Directors shall approve the strategic targets set out by the management and continuously and effectively monitor these targets, theactivities of the Company and its past performance. In doing so, the Boardshall strive to ensure compliance with international standards and wherevernecessary, take action before problems arise. The mission of the Company asit appears in Article 3 of the Articles of Association is indicated below:
a) To strengthen the Company’s position as a global airline by expanding its long-distance flight network,
b) To position the Company as a technical services provider by transforming itsmaintenance unit into a leading maintenance base for the region,
c) To promote the Company’s identity as a service provider in all areas ofstrategic civil aviation, including handling and flight training,
d) To maintain the Company’s leading status in domestic air transportation,
e) To provide seamless, high-quality air transportation services bycollaborating with a global airline alliance that complements its network inorder to further improve the Company’s image abroad and increase marketingopportunities and
f) To make Istanbul an important hub.
In addition, through its leadership position in the Civil Aviation Transport (SHT)sector of the Republic of Turkey, to be a premier European airline with global operations which is preferred for its flight safety, security, product range,service quality and competitive approach.
Vision:
a) Maintaining the growth trend that exceeds sector averages
b) Zero accidents
c) An understanding of service that captures the world’s attention
d) Unit prices that are competitive with those of low-cost carriers
e) Sales and distribution costs that are below sector averages
f) Loyal customers who carry out reservation, ticketing and boarding activitiesthemselves.
g) Personnel who understand that the added value they create is directlyproportional to the Company’s gains and who are committed to their owndevelopment
h) A commercial approach that creates business for partners who aremembers of the Star Alliance and which harnesses the potential that thosepartners offer
i) Management that is recognized for its embrace of the principals of modernmanagement, respecting the interests of its shareholders and all otherstakeholders.

The airline industry by its nature is a high risk sector, and we believe thateffective risk management systems at our Company are critical to ensuringsustainable growth. In this regard, plans are being implemented for theformation of a Financial Risk
Management structure within our Company thatwill provide a reasonable degree of security against fluctuations particularlyrelating to fuel prices, interest rates, and exchange rates. The Corporate RiskManagement Department, which was formed in 2008, is currently engaged therequired preparatory work for this purpose. The Corporate Risk ManagementDepartment has the overall responsibility of coordinating the relevant unitsof the Company in identifying and effectively managing both financial andother important areas of risk. The Corporate Risk Management Departmentis currently laying down the Financial Risk Management strategy as a matterof first priority. Immediately following the completion of this process, workwill begin on the establishment of an operational, strategic and external riskmanagement framework to support our Corporate Risk Management strategy.
The Company has an internal control mechanism in place that is implementedby the relevant units. Matters such as the correct pricing of tickets sold byemployees or agencies, the compliance of foreign offices’ accounting recordswith the Company’s regulations and the correct and prompt fulfillment oftax obligations are all matters dealt with in this scope. The Company makesevery effort to ensure that all records are accurate according to the Companyregulations and directives. The Company is, in addition, subject to annualinspections by the Prime Ministry’s Supreme Inspection Board. Separately,the Company is being audited by three auditors appointed in the
General Assembly Meeting:
İsmail GERÇEK - Member of Auditing Board
Naci AĞBAL - Member of Auditing Board
Prof. Dr. Ateş VURAN - Member of Auditing Board
Two auditors shall be elected from among Class A shareholders and oneauditor shall be the candidate nominated by the Class C shareholder. Theauditors have a one year term of office. An auditor whose term has expiredmay be reelected.
Class A Auditors shall be determined in the following manner:
a) In the event that the proportion of publicly traded shares is 35% or more,the rights granted to Class A shareholders to elect two auditors shall belongto shareholders holding publicly-traded Class A shares.
b) Shareholders holding publicly traded Class A shares may nominate a candidate for membership of the Board of Auditors, provided they representat least 2% of the total increased capital by attending the General AssemblyMeeting in which the election of the Board of Directors elections took place.Only publicly traded Class A shares shall be considered in the calculation ofthis 2%. Shareholders holding publicly traded Class A shares shall determinetheir candidates for Board of Auditors membership in a meeting held betweenthem. The right to nominate a candidate in this meeting shall belong to the holders of Class A shares which are publicly traded but not owned by thestate. In the event that the holders of publicly traded Class A shares do notrepresent 2% at the General Assembly Meeting, these shareholders’ rightsto nominate candidates for Board of Auditors membership shall be exercisedby those shareholders holding Class A shares which are not publicly traded,in accordance with the Turkish Commercial Code and Capital Markets BoardRegulations.
c) In the event of a vacancy on the Board of Auditors due to the death, resignationor dismissal of one of its members or otherwise, the vacant position shall be filled by means of an election to be held by the Board of Auditors in accordancewith Article 351 of the Turkish Commercial Code. If the holders of publiclytraded Class A shares have not nominated a candidate for the vacant positionon the Board of Auditors, the right to nominate a candidate shall belong to theClass C Shareholder. If the Class C share has been converted into a Class Ashare, the right to nominate shall belong to the shareholders holding ClassA shares that are not publicly traded. In such an election carried out to fillthe position vacated by the candidate nominated by shareholders holdingpublicly traded Class A shares, the percentages of 35% and 2% as referencedin paragraphs “a”, “b” and “c” shall not be taken into consideration.
d) In the event that these Articles of Association are later amended or newshare classes created, paragraphs “a” and “b” above defining the right of shareholders holding publicly traded Class A shares to determine two auditorsshall not be annulled or modified, unless such modification has been approvedby shareholders representing at least 65% of the capital.
The duties of the Auditors are to examine the Company’s general transactionsand budget and assume the responsibilities stipulated in the TurkishCommercial Code. Auditors are authorized and assume the responsibility to submit proposals to the Board of Directors, to ensure that the Company is managed efficiently and its interests protected, call a general meeting in theevent of vital and urgent matters, determine the agenda of such a meeting anddraw up the report specified in Article 354 of the Turkish Commercial Code.Auditors are responsible for fulfilling the duties assigned to them by law andthe Articles of Association in a satisfactory manner.

Article 15 of the Articles of Association defines the power and responsibilitiesof the Board of Directors and Article 19 defines the power and responsibilitiesof the General Manager.
Article 15. The Board of Directors represents and manages the Company.The Board of Directors is responsible for all tasks that are not assigned inthe General Meeting by law, as well as the duties laid out in the Articles ofAssociation, and it is granted all authority which these duties may require.As set out in Article 319 of the Turkish Commercial Code, the Board ofDirectors may assign all or part of its management and representation powersto one or more of its members, to a general manager, assistant generalmanager, a manager or managers who are not members of the Board, or mayform executive committees comprising of Board Members or non-membersto exercise its powers and fulfill its duties. All financial and other informationrequired for the Board of Directors to fulfill its duties as well as Boardproposals and attachments shall be submitted in a timely manner.
All financial and other information needed for the Board of Directors to fulfillits duties as well as Board proposals and attachments shall be submitted in atimely manner. Article 19. The duties and powers of the General Manager shallbe determined by the Board of Directors. The General Manager is required tobe diligent in fulfilling his or her duties, and shall be held responsible for anybehavior or actions which contravene this duty.

The activities of the Company’s Board of Directors, specified in Article 14 ofthe Articles of Association, are as follows:
The Board of Directors shall meet whenever necessary and at least once amonth. The meeting venue will be at Company headquarters; other venuesmay be chosen by a Board decision.
Matters to be discussed at Board meetings shall be specified in an agenda thatwill be communicated to Board Members prior to the meeting.
Invitations to Board meetings shall be made at least three days before theactual meeting.
The quorum for Board meetings is five members. Board decisions shall be
taken with the affirmative vote of at least four members. A member who has
failed to attend four consecutive Board meetings without a valid reason, or has
not participated in six meetings over the course of a year shall be considered
to have resigned.
Unless one of the members has requested a meeting, Board decisionsmay also be taken following the proposal of one of the members regardinga specific issue and with the written approval of all members. The validityof Board decisions is contingent on their having been set out in writing andsigned. Failure to reach a quorum for a decision on any issue shall be treatedas a rejection of the proposal in question.
The validity of the decisions to be taken by the Board of Directors on thefollowing matters requires the presence and affirmative vote of the BoardMember representing Class C shares at the meeting during which the decisionwas taken.
- Decisions that would clearly adversely affect the Company’s mission, as setout in Article 3.1 of the Articles of Association;
- Proposals to the General Assembly Meeting for an amendment to the Articlesof Association;
- Capital increases;
- Approval of the transfer of registered shares and the recording of this in theshare ledger;
- All transactions and decisions concerning direct or indirect commitmentson behalf of the Company for more than 5% of the total assets appearing inthe previous year’s financial statements submitted by the Company to theCapital Markets Board per each contract (this provision shall be automaticallyannulled when state-owned shares fall below 20% of the Company’s capital);
- The merger of the Company with other companies, its termination orliquidation;
- With the exception of those routes which are exclusively affected by marketconditions, or those that cannot cover their operational costs with otherresources, decisions concerning the termination of a route or a significantreduction in the number of flights.
The privileges of the Class C share may only be restricted by the SupremePrivatization Board or a state agency that has taken over its duties. In2009, the Board held 72 meetings and made 254 decisions. The validity ofBoard decisions
is subject to their having been written up and signed. Theorganization and communication of Board activities, the determination of thenumber of Board meetings, the following up of proposals made to the Boardand the drawing up of agendas are all duties of the General Secretariat.

During the reporting period, Board Members were prohibited from dealing and competing with the Company in accordance with Articles 334 and 335 of the Turkish Commercial Code. In addition to these prohibitions, there are alsorules set out in Section 11 of Turkish Airlines’ Human Resources RegulationsNo. 07-001, which prohibits Company personnel from providing services toother organizations.

Our Company has set forth its Code of Ethics within the scope of the Principalsof Corporate Governance, which is published on our Website.

The Board of Directors’ Financial Audit Committee is comprised of Mr. HamdiTOPÇU, Prof. Dr. Cemal ŞANLI and Mr. Mehmet BÜYÜKEKŞİ. The CorporateGovernance Committee, which audits the implications regarding the corporategovernance principles, is comprised of Mr. Muzaffer AKPINAR and Mr. OrhanBİRDAL.

Board Member remuneration is set by the General Assembly. Board Membersmay not obtain any loan or debt from the Company.